Scrapie and other transmissible spongiform encephalopathies (TSE) are transmitted by an infectious agent that resembles a virus in that it replicates in vivo and has distinct strains. However, the agent has been proposed to contain only PrP-res, a neuropathogenic, protease-resistant form of prion protein derived post-translationally from normal, protease- sensitive PrP (PrP-sen). To simplify the analysis of the conversion mechanism and the relationship of PrP-res formation to TSE agent replication, we developed a defined cell-free system in which PrP-sen is converted to protease-resistant forms similar to scrapie associated PrP- res. This conversion required the presence of preexisting PrP-res, providing the first direct evidence that PrP-res derives from interactions between PrP-sen and PrP-res. We have now studied the species specificity of this cell-free reaction using mouse, hamster, and chimeric PrP molecules. Species specific conversions were observed which correlated with the relative transmissibilities of these strains of scrapie between mice and hamsters. Conversion experiments performed with chimeric mouse/hamster PrP-sen precursors indicated that localized primary sequence differences between PrP-sen and PrP-res strongly affected the conversion reaction. The species specificity in the conversion of PrP-sen to protease-resistant forms may be the molecular basis for the barriers to interspecies transmission of scrapie and other TSEs in vivo. We also tested whether strain specific properties of PrP-res are transmitted to PrP-sen during formation of new PrP-res. PrP-res isolated from the brains of hamsters with the HY and DY strains converted hamster PrP-sen to two distinct sets of PrP-res species. This provided evidence that the self-propagation of PrP-res polymers with distinct 3-D structures may be a molecular basis for scrapie strains. The properties of the activity that converts PrP-sen to PrP-res were analyzed. The activity was stimulated by treatments with 2-3 M guanidine HCl. These treatments solubilized a majority of the PrP from otherwise insoluble PrP-res preparations, but the converting activity remained associated with insoluble particles. This provides evidence that the converting activity requires a multimeric form of PrP-res and argues strongly against the commonly espoused heterodimer model for PrP-res formation and scrapie agent replication.